Guide to .. Tax Management ,Tax Planning and Tax Saving
BLOG on Income Tax Management for - AY 2022-23 & 2023-24

37.  Disclose your Exempted Gifts & Avoid Income Tax Raid- How ?

The caption of this tip might sound a little odd to the readers but this is a very valuable tip in preventing a tax raid, or successfully tackling it, if a raid does take place.

Every person with a taxable income should make a full and true disclosure of one’s income. Such disclosure should be made not merely for income taxable under the provisions of the Income Tax Act, but of ex
empted income also, in the income tax return you file. Thus, a person may receive some income or gifts on ceremonial occasions. These are not liable to income tax at all. However, if the particulars about the receipt of such non-taxable amounts are given in the income tax return, it would help him to explain their utilisation by way of investment in securities, shares or bank fixed deposits, etc.

Therefore, whenever a person receives any income or property exempt from income tax, he would do well to make a proper disclosure in the space reserved for the purpose in the income tax return. Where the space is insufficient for recording such particulars, he may give the details in a separate statement enclosed with the return of income. In the same manner, where a person is not liable to any wealth-tax, he is not required to file a wealth tax return. Yet, he may disclose all items of wealth, taxable as well as non-taxable, particularly those not covered by the statement, concerning income like particulars of jewellery, etc. before the Assessing Officer, so that the AO is in possession of full knowledge and information regarding the same. This would help him in preventing an income tax raid. Further, when an income tax raid does take place, he would be able to prevent the seizure of jewellery or other assets, if these particulars are furnished to the Assessing Officer along with the return. It is always wise to file an income tax return, even when there is nil return or there is onlya marginal income tax liability, along with the necessary information pertaining to tax-free income and property, including jewellery, bank fixed deposits, etc.
Whenever an income tax raid takes place, the usual targets are bank lockers, safe deposit vaults and other lockers. This is because the usual suspicion of the Income Tax Deptt. is that, unaccounted income, valuables or jewellery, etc. are kept in such lockers. Some lockers may not be declared before the Assessing Officer. However, Income Tax Offi •cer through their investigation agency, are able to find out the lockers and their location, etc. The lockers are either sealed or broken open or, the owner of the lockers or the person in possession of the keys is forced to open the same and allow the Income Tax Departmental Officers to verify the contents. If a list of items kept in the locker along witha statement of their ownership is prepared and one copy is kept with the jewellery, etc. in the locker and one copy is placed in the office file or personal file of the assessee, it would facilitate explanations regarding their ownership. If jewellery, etc. belonging to more than one person is kept in one locker, care should be taken to put separate tags relating to the separate ownership of the articles along with other details. The other details should relate to the Income Tax File No. or Permanent Account No. of the owner of jewellery, etc. and the assessment year in relation to which the same has been disclosed. Where a person is not liable to income tax or wealth-tax and there has been no occasion to disclose the jewellery, etc. before the Income Tax Department, a statement about the mode of acquisition and the person from whom the jewellery, etc. were received, whether by way of gift or otherwise, should be noted in a separate sheet of paper and kept with the jewellery. The other copy should be available in the personal or office file of the assessee. This would facilitate explanations for the ownership of the jewellery, etc. If jewellery belonging to more than one person is kept at one place and separate tags or sheets of papers relating to their ownership are also kept along with the jewellery, the Income Tax Department would not attempt to club the same in one hand. Even if the entire jewellery 15/ ultimately mixed up by the Department, the fact that it was kept separately, under separate names, indicating separate ownership, would ultimately help in explaining the source of the jewellery and getting the jewellery released from the Income Tax Department.

You may also like ...

TallyPRIME-3.* Book (Advanced Usage)
TallyPrime Book @ Rs.600

| About Us | Privacy Policy | Disclaimer | Sitemap |
© 2024 : IncomeTaxManagement.Com